“How good is our score?”
We hear this question frequently in connection with survey measures of customer satisfaction and loyalty, and it’s not always an easy question to answer. One client recently told me that her organization strives for an average score of 9 or higher (on a ten-point scale) because “that’s what management wants.”
The issue boils down to where and how high to set the bar for key customer metrics, and managers have good reason to take this issue seriously. After all, the ultimate objective is to leverage insights gained from these customer metrics to improve customer experience and achieve desired business results. Also, decisions regarding resource allocation, reward and recognition, and accreditation of channel partners frequently are on the line. Thus, when managers set targets and goals for survey measures, the rationale for those targets had better be clear and defensible.
So, what is the best way to attack this challenge?
The answer rests entirely on the organization’s objectives. Is the goal continuous improvement of customer experience over time? If so, then answering the question, “how good is our score” comes down to determining whether a company and/or its operating units are seeing positive trends in customer satisfaction and loyalty measures, particularly after deliberate efforts to improve key aspects of the customer experience have been made. If the scores are improving, then those efforts are paying off and the organization is making progress toward its goal.
But what if, despite a company’s own progress, competitors are achieving even higher scores? In this case, is improvement enough, or should managers be focusing on competitive customer experience leadership? The answer probably is “yes,” and a benchmarking approach is needed: The organization must be able to compare its own scores to those of one or more selected competitors. Answering the question “how good is our score” boils down to establishing whether the company is lagging, equal to, or better than key competitors. Having access to a normative database like Maritz’s CE Benchmarks® is useful for this purpose, because it provides the data needed to make such comparisons.
In some instances, an organization’s objective may be cross-industry customer experience leadership – to be recognized as one of the “best of the best.” Simply being better than key competitors is not enough – the organization must also be able to determine how it compares to customer experience leaders in other industries. One again, access to a normative database like CE Benchmarks® makes cross-industry comparisons possible.
Of course, continuous improvement and customer experience leadership are both noble goals, but another question managers may raise is “does such improvement or leadership drive increased customer retention, repeat business, growth in revenues, or other key business results?” If this is what managers are after, then trending and benchmarking are not enough. Linkage analysis is required: managers must be able to demonstrate how a measure such as customer satisfaction is related to some desired business result such as customer retention or repeat purchasing. Once this relationship has been established and knowing where it wants/needs to be on retention or repurchase, the organization sets the target for customer satisfaction at the level associated with the retention or repeat purchase goal. Answering the question “how good is our score” boils down to determining whether the score associated with the desired business result has been achieved.
A couple of years ago, I wrote an article attempting to show that each of the target-setting methods described above has both strengths and limitations (see How Good Is Our Score?), and that companies are well-advised to use a combination of these methods to evaluate their scores on key customer measures. More recently, Sharon Alberg and I shared results of research showing that, depending on which method is used, the targets will be different. For example, we demonstrated that even when a brand scores better than its main competitors, that does not guarantee achievement of a level of customer satisfaction that will lead to the desired rate of customer retention.
So, what should your organization do?
The answer is, decide what you are trying to achieve by your efforts to manage the customer experience, then create targets that enable you to evaluate progress and success relative to those objectives. If you are seeking continuous improvement in customer satisfaction and loyalty, monitor trends in those measures. If you are trying to beat your competition, make the necessary benchmark comparisons. If you aspire to be a customer experience example, compare your scores to the best of the best. Looking to turn customer satisfaction and loyalty into dollars? Identify the target score that is associated with desired business results, and aim at that target.
It is very likely that your organization wants to achieve all or at least most of the preceding objectives. If so, then you should look at a combination of trends, benchmark comparisons, and linkage-based comparisons. By doing so, you will be able to answer the question, “how good is our score” in terms that are most relevant and meaningful to managers, employees, and partners who see, use, and are held accountable for customer experience measures.